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Federal Reinsurance Bill

Federal Reinsurance Bill

The Senate's two-year spending caps deal paves the way for lawmakers to include a big insurer ask in their spending omnibus: reinsurance and short-term funding of cost-sharing reduction payments.

Reinsurance is the "most important" policy Congress could pass to lower premiums because of the funding backstop and certainty for high-cost coverage of sick enrollees, said Justine Handelman, senior vice president of policy at the Blue Cross and Blue Shield Association.

The proposal gaining momentum is a bipartisan House bill by Rep. Ryan Costello (R-Pa.) that would funnel $10 billion annually for three years into a federal funding pool. Handelman and other insurance lobbyists said this proposal would help states that can't afford to set up a reinsurance pool through the 1332 waiver proposed by Sen. Susan Collins (R-Maine) in her Senate bill.

"While we are very supportive of returning authority and control to the states, we know that unless states have a waiver in place right now, as in Minnesota or Alaska, it's important that there be some certainty for every state in order to impact and lower premiums through some sort of federal reinsurance program that can be defined," Handelman said.

Costello's bill also funds cost-sharing reduction payments for two years. Collins would pair her bill with some version of the deal hammered out last September by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) that also funds the payments.

Murray and Alexander are back in talks about their deal to have it ready for the omnibus spending bill.

"We need to come to a prompt conclusion on our proposal so that it can be part of an omnibus bill," Alexander said Thursday. "So we'll be trying to do that in the next couple of days.

While the staffs of Costello and Collins are in talks about the reinsurance portion, it is unclear what a merged package would look like.

Reinsurance alone would reduce 2019 premiums by 17% compared to what they would otherwise be after the elimination of the Affordable Care Act's individual mandate, according to analysis from the Oliver Wyman Actuarial Consulting group, which modeled out a $15 billion federal reinsurance program.

With cost-sharing reduction payments thrown in, Wyman estimated individual market premiums would be 27% less than they would be without any congressional action.

This all amounts to about a 20% reduction compared to this year's premiums, Wyman said. Without any action, premiums would increase by an average of 13%.

Hesitating House Republicans are confronted with these two opposing scenarios as they prepare for daunting 2018 midterm elections, which coincide with open enrollment. Insurers will announce their 2019 rates in October.

"The further we move away from the failed (American Health Care Act) attempt, the more members are realizing that in October of next year you're going to have new rates come out," Costello said.

Since the beginning of talks about stabilizing the individual market, the Senate and the House have been especially split on funding cost-sharing reduction payments. House conservatives continue to oppose the concept of these payments—which they often refer to as a "bailout" for insurance companies.

Some remain recalcitrant on the issue of cost-sharing reduction payments. Rep. Mark Walker (R-N.C.), chair of the conservative Republican Study Committee, said while upcoming elections "in theory" are a factor in funding them, he opposes what he also terms a bailout of the insurance industry. He also addressed these payments rather than reinsurance.

"If you're making decisions because of (election) pressure, that's tough because if you're in the House that means every other year you're worrying about the pressure of elections instead of doing the right thing," Walker said.

But a spokesperson for the ultra-conservative House Freedom Caucus told Modern Healthcare that its members are open to looking at anything that brings down premiums for people enrolled in the individual market.

And overall GOP House leadership has shifted its tone since Alexander and Murray started negotiating their deal in the Senate—from calling out stabilization efforts as a "bailout" to backing Costello's bill. The House version also includes an amendment that blocks any federal money from paying for abortions—a conservative sweetener.

The House Energy and Commerce Committee holds jurisdiction over the policy and Committee Chair Greg Walden (R-Ore.) is backing the Costello effort, which now has 13 co-sponsors. The latest to sign on is Rep. Elise Stefanik, a moderate New York Republican who faces a potentially difficult re-election bid.

"Chairman Walden is supportive of Rep. Costello's efforts to help states repair their insurance markets that have been damaged by Obamacare," an Energy and Commerce Committee spokesperson told Modern Healthcare. "Rep. Costello's bill is a fair approach to granting states greater flexibility to help patients and lower costs."

In the upper chamber, senators also expect their leadership to include stabilization in the spending omnibus.

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Kaczmarek Insurance Services Agency, Inc. (“KIS”) has been specializing in individual health care and employee benefit solutions for small business for over 35 years. We are advocates for free market health care and consumer health rights; serving over 150 employers and over 1,000 individual customers.